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Sequoia Capital Invests in Berlin Start-Up

Wunderlist, an online task application, is a free service, users who want to access additional functionality pay a premium.Credit

LONDON – For many European start-ups, connections to Silicon Valley are still viewed as a sign of success.

In the latest deal, 6Wunderkinder, a Berlin-based maker of an online task application, announced on Tuesday that it had raised $19 million in a new round of investment led by Sequoia Capital.

This is the first time that Sequoia Capital, a Silicon Valley venture capital firm that was an early backer of technology giants like Google and Zappos, has invested in Berlin’s technology sector. It comes after a similar investment last month from Union Square Ventures in the Berlin’s start-up community, which has become one of Europe’s fast-growing technology hubs.

“We’re now ready for U.S. investment,” said Christian Reber, 6Wunderkinder’s chief executive, who reached the deal with Sequoia Capital in a week of negotiations in September. “It’s a sign that Berlin is doing something right.”

For Mr. Reber and other start-up founders in Europe, the backing of American venture capitalists remains an important indicator that their companies are able to move beyond their local roots.

Despite the growing number of prominent start-ups spread across the Continent, many European countries are still divided by cultural and language barriers that make it difficult for small tech firms to quickly expand compared with their American counterparts.

A continuing lack of European venture capital, particularly for start-ups moving beyond their early development, has led many local founders to seek out American investment. The companies often use the money partly to access to the American market, according to European entrepreneurs.

6Wunderkinder, for example, now has roughly a third of its six million users based in the United States. The company, started in late 2010, now expects to open an office on the West Coast to increase its American operations.

“I’m going to be spending a lot of time in the U.S., but I’m not going to relocate,” said Mr. Reber, who moved to Berlin as a student in the mid-2000s and now oversees a team of more than 40 developers and engineers in a cramped office in the center of the city. “It’s more cost effective to be in Berlin.”

Like American counterparts Dropbox and Evernote, which are also backed by Sequoia Capital, 6Wunderkinder offers a free service, but it charges a premium to users who want additional functionality, like task-sharing between large groups.

Berlin, the capital of Germany, is gaining a reputation as a center for new technology. The city’s low-cost living, access to international talent and lively arts and cultural scene has now placed it alongside London, Tel Aviv and Stockholm as a leading start-up hub.

Yet to cement its position and continue to attract American investment, Berlin needs to offer investors high returns through either initial public offerings or sales to larger technology companies, according to local venture capitals and entrepreneurs.

These types of multimillion-dollar deals have yet to take root in Berlin, though analysts hope that the likes of Zalando, a German e-commerce website that is valued at around 3 billion euros, or $4 billion, could prove that local tech companies can succeed in the public markets.

Others have focused on Wooga, an online game start-up founded in 2009 that competes with the likes of Zynga for users on mobile phones and social networking sites including Facebook. As King.com, its London-based rival, is now planning a listing on the American market, many in Berlin’s tech community expect that Wooga may follow a similar path.

“We are not preparing anything,” said Wooga’s chief executive, Jens Begemann. “But who knows what we will do in the future.”